Opinion
No. CV 04 4002756
January 7, 2005
MEMORANDUM OF DECISION
The plaintiff, Priority Care, Inc. (Priority Care), filed an application for a temporary injunction and an order to show cause on October 25, 2004, against the defendants, Patricia Tyler-Kopf, Jacqueline Sabella and Daniel A. Pullo, its former employees (collectively "individual defendants"), and their current employer, Gentiva Health Services, Inc. (Gentiva).
Priority Care also filed a six-count complaint alleging breach of contract against the individual defendants; tortious interference with a contract against Gentiva; tortious interference with a contract against the individual defendants; tortious interference with business expectancies against the individual defendants and Gentiva; a violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., against Gentiva; and the misappropriation of confidential information and trade secrets in violation of the Connecticut Uniform Trade Secrets Act (CUTSA), General Statutes § 35-51, against the individual defendants and Gentiva.
By requesting injunctive relief, Priority Care is seeking to enjoin the individual defendants and Gentiva from further exploiting and misappropriating Priority Care's confidential information and from soliciting its clients.
On October 8, 2004, this court issued an order requiring the defendants to appear for a hearing to show cause why such relief should not issue. On October 29, 2004, Priority Care filed a pre-hearing memorandum of law in support of its motion. Therein, Priority Care argues that the individual defendants have misappropriated confidential information and trade secrets, including patient data, their identities and residential addresses, diagnoses and treatment regiments, all for the benefit of Gentiva, their current employee, thereby causing irreparable harm to Priority Care.
In the defendants' memorandum of law in opposition, they argue that Priority Care cannot meet its burden for a temporary injunction because it is not likely to succeed on the merits.
Specifically, the defendants argue that they never agreed not to solicit patients; that Priority Care's handbook did not create enforceable contractual obligations; and that they did not misuse any confidential or trade secret information.
The court heard oral arguments on the issues and reserved decision.
Having considered the parties' arguments and the applicable case law, the court makes the following findings.
Priority Care is a wholly-owned subsidiary of Patient Care, Inc., licensed, accredited, and, in most locations, a Medicare-certified home care company. It provides an array of home health care services, including professional nursing care, rehabilitation therapies, home-health aide, homemaker companion, live-in and home support services, medical social services and counseling, behavioral and mental health counseling and support services, case management services and nutritional support therapies and counseling.
The individual defendants are registered nurses who were employed by Priority Care and are currently employed by Gentiva, a heath services provider and competitor of Priority Care.
As employees of Priority Care, the individual defendants provided home nursing care and related services to mental health patients residing in group homes.
Priority Care has an employee handbook, with amendments thereto, and policies pertaining to patient confidentiality, including the Patient Care Code of Conduct. The Patient Care Code of Conduct includes the following relevant provisions:
" Maintain Patient Confidentiality. We must respect patients' privacy. We must also keep information about patients private and confidential. Any information that you come to know about a patient must never be revealed, either on purpose or in a conversation that could be overheard by other people, unless you are speaking to co-workers participating in the care of the patient, or you are authorized to speak to a relative or friend involved in the patient's care."
" Maintain Confidentiality or Company Business Information. All personnel shall maintain the confidentiality of the Company's business information and shall not use any such confidential or proprietary information, except as appropriate for Company business."
" Review and Acknowledgment. Please read the Code of Conduct carefully, then sign and return the attached Acknowledgment. By signing the Acknowledgment, you are telling Priority Care that: (1) You have read the Code of Conduct carefully; (2) You understand what is expected of you as written in the Code of Conduct; and (3) You agree to follow the guidelines explained in the Code of Conduct."
One of the individual defendants, Sabella, on September 11, 1998, acknowledged receipt of the Employee Handbook.
In September 2002, Priority Care amended its handbook to include Policy E14A entitled " Confidentially Speaking." In relevant part it states:
"You agree that without prior written approval from an officer of the Company you will not at any time either during employment with the Company or in the case of termination of your employment disclose directly or indirectly to any person or entity . . . or for your own benefit any confidential information of the Company, or its affiliates, including, without limitation . . . any other subject matter pertaining to the business of the Company of any of its clients, customers, consultants or affiliates known to, learned or acquired by you during the course of your employment. Upon the termination of your employment, you shall promptly surrender to the Company all documents, work papers, lists, memoranda, records and other data (including all copies) containing or relating in any way to confidential information." "You agree that during your employment with the Company and for a period of one (1) year after termination of your employment, you will not, without the prior written consent of the Company, directly or indirectly solicit for employment or engagement or encourage to leave the employ of the Company or its affiliates any nurses or home health care aides who were employed by the Company during the period of your employment or during the preceding twelve month period."
On October 1, 2004, Priority Care was advised by the case managers for a number of its mental health patients residing in group homes, all of whom had previously been treated by one of the individual defendants, that home nursing care services for these patients were being reassigned to Gentiva. These patients' treating physicians issued orders to Priority Care releasing the patients to Gentiva. Thereafter, Priority Case filed the instant application for temporary injunction.
"A temporary injunction is a preliminary judicial order, granted at the outset or during pendency of an action forbidding performance of acts until the rights of the parties respecting them have been finally determined by the court." Booth Waltz Enterprises v. Kimlingen, Superior Court, judicial district of Windham at Willimantic, Docket No. CV 04 0072045 (September 14, 2004, Potter, J.). "The principal purpose of a temporary injunction is to preserve the status quo until the rights of the parties can be finally determined after a hearing on the merits." (Internal quotation marks omitted.) Rustici v. Malloy, 60 Conn.App. 47, 56 (2000). "[T]he granting of an injunction is discretionary and in exercising that discretion, the court . . . may consider and balance the injury complained of with that which will result from interference by injunction." Brown v. Palumberi, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 03 0194432 (November 12, 2003, Lewis, J.).
Connecticut trial courts usually require movants requesting an injunction to satisfy a four-part test. The movant must show "(1) a likelihood of success on the merits; (2) imminent, substantial and irreparable injury; (3) lack of an adequate remedy at law; and (4) that a balancing of the equities favors the granting of the injunction." Kent Literary Club of Wesleyan University v. Whaley, Superior Court, judicial district of Middlesex at Middletown, Docket No. CV 04 0104195 (September 16, 2004, Aurigemma, J.).
"In its consideration of a request for an injunction, the court may consider and balance the injury complained of with that which will result from interference by an injunction . . . The task of balancing the equities [between the parties] necessarily requires consideration of the probable outcome of the litigation. Decisions of our trial courts have frequently referred to the burden of an applicant to show a reasonable degree of probability of success before a temporary injunction to preserve the status quo may be granted." (Citations omitted; internal quotation marks omitted.) Lawrence Mall v. West Haven, Superior Court, complex litigation docket at Waterbury, Docket No. X06 CV 03 0183330 (September 22, 2004, Alander, J.) ( 37 Conn. L. Rptr. 903).
"[I]t is well settled law in Connecticut that a plaintiff is entitled to a preliminary or temporary injunction only if that plaintiff proves a reasonable likelihood of success on the merits and irreparable harm to [it] if the injunction is not issued." Scatena v. Rowland, 47 Conn.Sup. 251, 253 (2000). Consequently, each claim, at a minimum, must succeed on the merits in order for Priority Care to receive a temporary injunction.
In a its supporting memorandum, Priority Care only argues the CUTSA claim. In its opposing memorandum, the defendants argue the breach of contract and CUTSA claims. This decision, therefore, addresses only those two counts.
Count I — Breach of Contract
Priority Care argues that the employee handbook and the code of confidentiality contain the company's policies.
It is Priority Care's position that these agreements were supported by adequate and valuable consideration and that the individual defendants signed statements acknowledging receipt of the handbook.
In its complaint, Priority Care alleges that the individual defendants entered into, and thereafter violated "a valid and enforceable agreement that prohibited [them] from soliciting Priority Care's clients within one (1) year of termination of their employment . . . The individual defendants have nevertheless actively solicited, recruited and/or encouraged Priority Care's clients . . . in contravention of the terms of the handbook." (Emphasis added.) These violations of the policies in the handbook and code, Priority Care maintains, constitute a breach of contract claim.
The defendants argue that they "never signed any document that prevented them or prohibited them, after their employment at Priority Care ended, from continuing to provide home health care services to the same patients that they assisted while employed by Priority Care." As a result, the defendants assert that Priority Care cannot claim a breach of contract.
"The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages." Rosato v. Mascardo, 82 Conn.App. 396, 411 (2004). "It is firmly established that statements in an employer's personnel manual may . . . under appropriate circumstances . . . give rise to an express or implied contract between the employer and employee." Acevedo v. Ledgecrest Health Care, Superior Court, judicial district of New Britain, No. CV 00509027 (October 18, 2001, Shortall, J.). "The intention of the parties manifested by their words and acts is essential to determine whether a contract was entered into and what its terms were." Id. "[A] contract is unambiguous when its language is clear and conveys a definite and precise intent . . . The court will not torture words to impart ambiguity where ordinary meaning leaves no room for ambiguity . . . Moreover, the mere fact that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous." Smithfield Associates, LLC v. Tolland Bank, 86 Conn.App. 14, 19 (2004).
See Finley v. Aetna Life Casualty Co., 202 Conn. 190, 520 A.2d 208 (1987) (evaluating specifically whether terms of a personnel manual constitute a contract). "The intention of the parties manifested by their words is essential to determine whether a contract was entered into and what its terms were." Id., 199.
"On numerous occasions Superior Courts have held that contract claims based solely on the terms of an employee handbook must fail if the handbook has an effective disclaimer. See, e.g., Shain v. Blue Cross Blue Shield, Superior Court, judicial district of New Haven . . . Docket No. [CV 93] 349216 (October 21, 1996, Zoarski, J.T.R.) (disclaimer stating the contents of the handbook do not constitute the terms of a contract of employment held to be effective); Markgraf v. Hospitality Equity Investors, Inc., Superior Court, judicial district of Danbury, Docket No. 308501 (February 18, 1993, Fuller, J.) ( 8 Conn. L. Rptr. 378) ("The agreement itself disclaims that it is a contract"); Grieco v. Hartford Courant Co., Superior Court, judicial district of Hartford [New Britain at Hartford], Docket No. [CV 90] 372593 (January 27, 1993, Aurigemma, J.) [(8 C.S.C.R. 219)] (plaintiff cannot base a breach of contract claim on a handbook with an explicit disclaimer)." Acevedo v. Ledgecrest Health Care, supra, Superior Court, Docket No. CV 00 509027.
In the present case, Priority Care's employee handbook states in relevant part: "[E]ither [the employee] or Priority Care can terminate the [employment] relationship at will, with or without cause, at any time, so long as there is no violation of applicable federal or state law . . . Furthermore, [the employee] acknowledge[s] that this handbook is neither a contract of employment nor a legal document." (Emphasis added). The disclaimer in the handbook is clear and unambiguous. The employees are not contractually bound to it. In the absence of an enforceable agreement, there can be no breach of that agreement, and, therefore, Priority Care cannot prevail on the merits of its contract claim.
The defendants argue that, in the event that the handbook and its policies are considered contractual, the defendants did not receive adequate consideration for such a contract. "[V]alid consideration . . . requires a party to do, or promise to do, something further than, or different than, that which he is already bound to do." Smithfield Associates, LLC v. Tolland Bank, supra, 86 Conn.App. 24. Having found that no contract exists, however, this court does not need to address the issue of consideration.
Count VI — Misappropriation of Confidential Information and Trade Secrets
Priority Care argues that injunctive relief is an appropriate remedy in the present case for trade secret misappropriation because the "[l]oss of confidential and proprietary information is not measurable in money damages." It further argues that a violation of CUTSA is presumed to cause irreparable harm, and, thus, it has been relieved of the burden of proving irreparable harm and no adequate remedy at law.
In the alternative, Priority Care also maintains that the amendment to the code, which was acknowledged by the individual defendants, expressly states that a breach of patient confidentiality would irreparably harm it. Priority Care furthermore argues that it has made reasonable efforts to maintain the secrecy of its confidential client information, to which the individual defendants were privy, to constitute a "trade secret" under CUTSA.
In response, the defendants argue that Priority Care's patient list cannot be considered a trade secret, the value of its purportedly confidential patient information is minimal because this information is marketed by agencies who provide these services freely, there is no evidence that the defendants improperly used or disclosed any patient information to the people with the authority to assign patient care, and the doctors, case managers and patients were the ones who wanted the individual defendants to continue to provide the patients with home health care services after the individual defendants joined Gentiva.
The crux of Priority Care's allegations is that the defendants are liable for misappropriating confidential information and trade secrets, that is, information about its patients. "[A] primary issue to be determined [in all trade secret actions] . . . is whether there is a trade secret existing which is to be protected." Elm City Cheese Co. v. Federico, 251 Conn. 59, 70 (1999).
General Statutes § 35-51(d) defines a trade secret as inclusive of a "customer list that: (1) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy."
"Customer lists are on the periphery of the law of trade secrets and unfair competition. Although factors exist to assist the court, it need not accord them equal weight or consideration. Whether a particular use of a customer list by a former employee constitutes an exercise of his right to use general knowledge and experience gained in the former employment, or whether it violates his confidential relationship with his former employer not to use trade secrets or confidential information acquired in the course of his former employment, will depend generally on the particular facts and circumstances involved. It is a question of fact to be determined by the trial court." Holiday Food Co. v. Munroe, 37 Conn.Sup. 546, 551-52 (1981).
"There is no trade secret however, if the customers' names can readily be ascertained through ordinary business channels or reference resources." Robert S. Weiss Associates, Inc. v. Wiederlight, 208 Conn. 525, 538 (1988).
"[W]here the identity of the customers is readily ascertainable through ordinary business channels or through classified business or trade directories, the courts refuse to accord to the list the protection of a trade secret." Elm City Cheese Co. v. Federico, supra, 251 Conn. 103. "Some factors to be considered in determining whether given information is one's trade secret are (1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and others involved in his business; (3) the extent of measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended by him in developing the information; [and] (6) the ease or difficulty with which the information could be properly acquired or duplicated by others." Department of Public Utility v. Freedom of Information Commission, 55 Conn.App. 527, 530 (1999).
Priority Care cannot establish that the names, addresses or treatment needs of its patients constitute either proprietary confidential information or a trade secret in violation of CUTSA. Priority Care has stated that after the individual defendants began working for Gentiva, it was "advised by the case managers for a number of its mental health patients residing in group homes, all of whom had previously been treated by one of the individual defendants, that home nursing care services for these patients was being reassigned to Gentiva. Shortly thereafter, these patients' treating physicians issued orders to Priority Care releasing the patients to Gentiva."
By Priority Care's own admission, the patients' case managers and/or doctors were privy to information about the patients and were responsible for the patients' transfers from Priority Care to Gentiva.
The information Priority Care considers to be trade secrets was in actuality information provided by third parties who were free to share such information with other home health service providers, including Gentiva.
The court finds that because this information was available to others outside of Priority Care, it does not constitute a trade secret and, therefore, is not in violation of CUTSA.
See generally, Holiday Food Co. v. Munroe, 37 Conn.Sup. 546 (1981) (holding that the defendant's customer list was not a trade secret partly because the information on the list could have been easily obtained from other sources, it contained no confidential data, the plaintiff made no attempt to hide it from those not authorized to see it, and the defendant had not signed a covenant not to compete.
The court further finds that Priority Care has failed to establish the likelihood of success on the merits on its claim for breach of contract and CUTSA and that failure to succeed is sufficient to defeat its application for a temporary injunction. Consequently, the court does not have to consider the remaining prongs of the test. See Zamstein v. Anthem Blue Cross Blue Shield of Connecticut, Superior Court, judicial district of Hartford, Docket No. CV01 0809618 (Sept. 12, 2002, Peck, J.).
For the foregoing reasons, the application for temporary injunction is hereby denied.
By the Court
Joseph W. Doherty, Judge